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Leaving the EU could cost the British economy £56bn a year, think tank warns

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We’d need more migrant workers from outside the EU

A leading think tank has warned that a British exit from the EU could result in major economic hardship, unless migration levels were maintained.

Just 44 days until the general election, the research by the influential Open Europe think tank is likely to anger EU sceptics in the Conservative party as well as those supporting the anti-EU party UKIP.

The report says that if Britain was to quit the EU (the so-called Brexit), the resultant loss of trade and the supply of European migrant workers could cost the British economy up to £56bn a year (2.2% of its GDP).

In order to maintain its economy, the UK would have to forge stronger links with countries outside Europe and promote migration from the rest of the world, the report contends.

Writing on the Open Europe website, director Mats Persson said: “We say there is a life outside the EU but that it would involve decisions that could be the opposite of what a number of people who want to leave the EU want to see – including much freer trade with the rest of the world, lower levels of regulation and even a liberal labour migration policy.”

Persson adds: “Our estimates of the impact of Brexit range between the UK being 2.2% of GDP worse off in 2030 if it leaves and reverts into protectionism; to UK being 1.6% of GDP better off in 2030 if it leaves and pursues economic liberalism.”

“Politically very sensitive”

Migration is high on the political agenda as we head towards the election, with growing numbers of voters voicing a desire to see a dramatic reduction on the numbers of people coming to the UK from abroad.

UKIP’s growing popularity is recognised as being a key factor behind David Cameron’s decision to fight the election with a policy to have an in/out EU referendum in 2017.

Nonetheless, many have lost patience with Cameron, who in 2010 promised to get net migration down to the “tens of thousands”. But instead the prime minister has presided over rising migration levels.  According to the Financial Times, the latest figure indicates that migration is at a 10-year high with 289,000 people arriving in the year to September 2014.  

But those championing a Brexit may want to be careful what they wish for.

Here’s what the report says: “Opening up the UK economy to trade with the rest of the world – including the USA, India, China and Indonesia – is essential to economic growth post Brexit. However, this would mean exposing UK firms and workers to whole new levels of competition from low-cost countries, and would therefore be politically very sensitive.”

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